5 Student Loan Hacks

They say the only certainties in life are death and taxes, but we may soon need to add student loans to that list.

For most of the 40 million Americans with student loan debt, repaying those loans is a certainty. What’s not a certainty is how much they’ll end up spending when all is said and done. The principal (or original amount borrowed) may be set in stone, but there are ways to reduce the amount you spend on interest.

Most borrowers don’t think about interest when they sign on the dotted line, but at the end of the day it adds up to a substantial amount. For example, a borrower with $30,000 in loans (the average undergrad amount borrowed) at a 6.8% interest rate and 10-year term will pay $11,428 in interest over the life of the loan. Put another way, that’s a 38% markup on the original amount borrowed.

While there’s not much you can do about paying some interest, there are a few simple ways to reduce the amount you pay – and some will even make your life a little easier in the process. Here are five of our favorites.

1. Use Your Windfalls Wisely

A good rule of thumb is that the faster you pay off a loan, the less you’ll pay in interest. This means that every extra dollar you put toward your student loans translates to a lower interest bill. For a cash-strapped borrower, finding “extra dollars” may be easier said than done. But if you do get a windfall – say, a bonus at work or a tax refund – pledge to use it on your loans rather than letting it slip through your fingers.

2. Pay Bi-Weekly Instead of Monthly

If you can comfortably bump up your monthly payment amount, do it. Even a small addition can go a long way to reducing total interest. If you get paid bi-weekly, consider making two payments each month – one for your monthly minimum and one “bonus” payment of a nominal amount like $25 or $50. Sync these up with your paycheck so the money leaves your account before you have a chance to miss it.

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3. Ask for Student Loan Payments as Gifts

With so many people grappling with student loans these days, it’s becoming more and more acceptable to ask for financial assistance instead of wedding or other special occasion gifts. If registering for cold hard cash feels too gauche, you can direct people to a service like the Tuition.io gifts platform, which allows them to gift up to $500 toward your loans using just your email address.

4. Set Up Automatic Payments

There are actually several good reasons to have your student loan payment automatically deducted from your bank account. For one thing, it saves you time. And many lenders offer an interest rate discount for utilizing their auto-pay program (usually 0.25%). Plus, it can help keep your credit in good shape, because forgetting to make a payment can do serious damage to your credit score. The upshot? Setting up an automatic payment can save you time and money AND give you peace of mind.

5. Try to Refinance

One of the fastest, easiest ways to save money on student loan interest is to reduce your interest rate – and the only way to do that is to refinance your loans. Not only can refinancing help you save a lot of money on interest, but it can sometimes make your monthly payments lower or shorten the amount of time it takes to pay off the loans. Plus, refinancing multiple loans consolidates them into one loan, simplifying your monthly bill and payment.

[Editor’s note: As you pay down your student loan debt, you can see how it affects your credit score over time by monitoring your credit scores. There are free services that allow you to track your credit scores, including through Credit.com, where you can also get an analysis of your credit and a plan to improve your scores for free.]